“So my homeowners insurance will pay out if my roof collapses during another Northeast blizzard, if a tree falls on my car, if my basement is flooded…”
Hold that thought while we get a megaphone. Flood insurance (and earthquake or landslide insurance, for that matter) is NOT covered by regular homeowners insurance, even though floods are the most common natural disaster in the U.S. You need to purchase flood insurance through the National Flood Insurance Program (incidentally, it’s overseen by Federal Emergency Management Agency). Why is this so vital? We’ll let you judge: Superstorm Sandy damaged or destroyed 346,000 homes in New Jersey alone, yet two years later nearly 60% of residents affected by the storm still needed money to rebuild or raise their homes. Convinced yet?
Outside of flood and earthquake insurance, you can add supplementary riders to your homeowners insurance. We’ll share a few common ones with you:
If you have expensive items like your grandmother’s diamond earrings or a set of antique china, consider purchasing a rider for jewelry and other pricey items; that policy will also cover those items if you lose them or if they’re stolen outside your home.
For some insurers, computers, cameras, and smartphones fall under a valuable items rider, but will only pay up to a specified amount. Other policies offer technology specific add-ons- worthwhile if you run a tech business out of your apartment.
Contents Replacement Cost:
There are limits to this add-on, but generally speaking, this coverage pays for the replacement cost of your damaged property, with no deduction for the item’s depreciated value.
Your flood insurance policy may or may not cover sewer or septic backups; your regular homeowners policy does not. If smelly, flooded yards are your thing, that’s cool; if not, you’ll want to consider this add-on as well.
Identity Fraud Expenses:
This add-on is far more common now than in previous years. If your name is attached to the opening of five new credit cards… in Russia, this rider will cover the attorney fees to clear your name, as well as miscellaneous costs like notarizing official documents.
Personal Umbrella Policy:
Let’s say that trainwreck friend tumbled down your stairs, rolled out your front door and into your driveway; then a car leaving your party ran over their broken leg and your cranky pug was so incensed by Drunky’s screeching that your pup bites Drunky. It all sounds like a hilarious Will Ferrell sketch… until Drunky sues you for $1 million for injuries and emotional distress. Great Odin's Raven! For serious accidents, an umbrella policy kicks in extra liability coverage so you’re not sued for everything you own. With umbrella coverage, you and your personal property are covered anywhere from $1 to $5 million of liability, including major lawsuits.
If you'd prefer to not blurt out, "Did we just become best friends?" with your insurance company, pick which add-ons are most relevant to you and your home’s situation. If you didn’t inherit any antiques from your grandparents, for instance, skip the Valuable Items rider.
Photo: Matthew Wiebe
This article is 2nd in the Insuring Your Home Series